Which of the Following Is a Drawback of a Floating

Multiple Choice

Which of the following is a drawback of a floating exchange-rate system?

A) Inflation is fully transmitted from one country having a higher rate of inflation to another one having a relatively lower rate.
B) Monetary policy is ineffective in raising aggregate demand since it cannot be directed toward achieving internal balance.
C) Overshooting of exchange rates may cause excessive resource shifts into and out of trade oriented industries.
D) Adverse foreign trade shocks are especially damaging since any intervention by the central bank adds to the recession.